Hong Kong: Asian markets mostly fell on Monday after US lawmakers failed to prevent the imposition of $85 billion in spending cuts that kicked in at the end of last week.
Chinese shares suffered the biggest sell-off with property developers hit by measures to cool the housing market, but Tokyo enjoyed modest gains as the man tapped to become Japan’s top central banker vowed to tackle deflation.
Shanghai lost 3.65%, or 86.10 points, to end at 2,273.40, Sydney slipped 1.49%, or 75.6 points, to 5,010.5, and Seoul was off 0.66%, or 13.34 points, at 2,013.15. Hong Kong lost 1.50%, shedding 342.41 points to 22,537.81.
Tokyo put on 0.40%, or 45.91 points, to close at 11,652.29.
US politicians traded barbs over the weekend after the “sequester” of deep federal spending cuts that kicked in on Friday, with most economists warning it will lead to rising unemployment and dent economic growth.
The White House said Sunday that as voters start to feel the pain, Republicans will pivot and seek compromise.
But the Republicans did not sound like they were in any mood to budge, with the party’s Senate leader Mitch McConnell saying the American people understood it was time for belt-tightening.
There had been hope that Democrats and Republicans would be able to reach a compromise to cut the budget that would not be as painful, but last-minute talks failed Thursday.
However, despite the lack of movement in Washington, investors are confident a deal will eventually be made. Wall Street got a boost after fresh data that showed consumer spending rose in January at double the rate of December, despite lower personal income.
There was further cheer from a report that showed US manufacturing activity hit the highest level since mid-2011.
The Dow jumped 0.25% to within sight of its all-time high seen in October 2007, before the onset of the global financial crisis.
The broad-based S&P 500 was up 0.23% and the Nasdaq gained 0.30%.
On currency markets the dollar, which enjoyed a strong rally in New York, eased slightly to 93.50 yen in Tokyo against 93.59 yen late Friday despite a pledge from Haruhiko Kuroda, the government’s nominee to lead the Bank of Japan, to do “everything possible” to conquer deflation.
Kuroda, widely expected to be confirmed by parliament as Japan’s top central banker in the coming weeks, dismissed the bank’s current 101 trillion yen asset-buying programme as “not enough”.
He added that if he is appointed, achieving the bank’s recently set two% inflation target “at the earliest time is my most important duty”.
His vow signalled the possibility of more aggressive monetary easing, and similar statements by Japanese leaders in recent weeks have sent the yen tumbling in a boost for exporters as their products become more competitive.
But Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ, said: “His comments initially helped drive the yen weaker, but then investors realised he wasn’t saying anything particularly new, and it led to a buyback.”
The euro bought $1.3005 and 121.66 yen, compared with $1.3027 and 121.92 yen.
Chinese shares took a beating, with property plays worst hit, after Beijing on Friday announced measures to cap prices.
These included higher downpayments and mortgage rates for buyers of second homes in some cities, as well as making homeowners who sell their properties pay a capital gains tax of 20% on their profits.
“The measures are a big blow to property stocks. The implementation of (the) capital tax on property transactions will definitely affect housing demand,” Amy Lin, analyst at Capital Securities, told Dow Jones Newswires.
Oil prices were lower. New York’s main contract, light sweet crude for delivery in April dropped 52 cents to $90.16 a barrel in the afternoon and Brent North Sea crude for April delivery shed 30 cents to $110.10.
Gold was at $1,577.65 at 1045 GMT compared with $1,571.29 late Friday.
In other markets:
—Taipei fell 1.22%, or 97.29 points, to 7,867.34.
Taiwan Semiconductor Manufacturing Co shed 2.86% at Tw$102.0 while Hon Hai Precision was 1.35% lower at Tw$80.5.
—Manila ended flat, dipping 4.71 points to 6,637.56.
Energy Development slipped 5.51% to 6.35 pesos while Ayala Corp. dropped 2.54% to 556 pesos.
—Wellington fell 1.49%, or 64.39 points, to 4,253.60.
Telecom was off 1.9% at NZ$2.33 and Chorus slipped 1.38% to NZ$2.86.
—Singapore fell 0.90%, or 29.55 points, to 3,239.95.
United Overseas Bank gained 0.68% to Sg$19.28 while real estate giant Capitaland dropped 3.63% to Sg$3.72.
—Jakarta lost 1.04%, or 50.15 points, to 4,761.46.
Miner Aneka Tambang lost 0.77% to 1,290 rupiah, Indo-Rama Synthetics dropped 2.88% to 1,350 rupiah, while Hero Supermarket gained 2.54% to 5,050 rupiah.
—Bangkok was flat, edging up 1.12 points to 1,540.72.
Telecoms company Advanced Info Service jumped 1.93% to 211.00 baht, while Bangkok Life Assurance rose 3.73% to 69.50 baht.
—Kuala Lumpur was flat, slipping 1.46 points to 1,635.98.
YTL Power International shed 1.3% to 1.49 ringgit, while Felda Global Ventures Holdings slipped 0.9% to 4.44. UEM Land Holdings gained 4.2% to 2.50 ringgit.
—Mumbai slid 0.21%, or 40.56 points, to 18,877.96.
State-run hydropower firm NHPC Ltd plunged 18.84% to Rs.19.6 while private oil explorer Essar Oil Ltd fell 11.71% to Rs.72.75. AFP